STEC Q1 Net Loss Beats by a Penny; Q2 View Light

By Tiernan Ray

Shares of solid-state drive vendor sTec (STEC) are unchanged in late trading at $3.84 after the company this afternoon reported Q1 revenue in line with analysts’ estimates, and a net loss per share that was a penny better than expected, and forecast this quarter’s results slight below Street expectations.

Revenue in the three months ended in March fell 56%, year over year, to $22 million, yielding a net loss of 41 cents, excluding some costs.

The Street had been modeling $22 million and a 42-cent loss.

For the current quarter, the company projected $23 million to $26 million in revenue, and a non-GAAP loss of 41 cents to 43 cents. That compares to the current Street consensus of $25.5 million and a 39-cent loss.

STEC CEO Mark Moshayedi remarked that the company is seeking to move away from just selling to large equipment makers and to sell more product direct to users:

Focusing our efforts on selling SSDs as a component to a limited set of OEM customers in a market that has attracted much larger and more vertically integrated competitors has created challenges for us. In response to these changing dynamics, we are making significant investments in the people, tools and resources necessary to transition from an OEM-centric model to a more-balanced and diversified sales model. One of our high priority initiatives is to become more recognized and valued to end-users. To that end, we have re-branded the company, launched a global channel program and have hired enterprise sales and marketing personnel with expertise in systems and applications. As we continue to execute our plan, our target is to achieve a sales mix by year-end with about half of our revenue coming from traditional OEM customers and the other half coming from non-OEM customers, including global channel partners and direct enterprise customers. Longer-term, our goal is to have our customer base as widely distributed as possible.

sTec has traditionally sold to large original equipment makers such as Hewlett-Packard (HPQ) and EMC (EMC), but the market for solid-state drives has become crowded with much larger suppliers such as Seagate Technology (STX) and Western Digital (WDC).

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.